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Canadian consumer survey paints gloomy picture

The Conference Board of Canada says consumer confidence in the country skidded to its lowest level in more than a quarter century this month.

Mon., Dec. 22, 2008

OTTAWA – The Conference Board of Canada says consumer confidence in the country skidded to its lowest level in more than a quarter century this month.

It was the third consecutive monthly decline and dropped the index 3.3 points to 67.7, lower than during the 1991 recession and the lowest since 1982, near the end of the deepest recession in the post Second World War period.

"Only during the recession of 1981-82 have we seen lower levels of confidence," said Glen Hodgson, the Conference BoardChief Economist. "Despite the rapid fall in gasoline prices across the country, consumers continue to be gloomy about their financial situation."

The think tank said Canadians say they are financially worse off today than six months ago and expect to be even more worse off in six months.

That suggests that ordinary Canadians are tightening their belts and will continue to watch their spending carefully as they worry about job insecurity and try to pay down debt.

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That could hurt the key retail sector as well as sales of big ticket items such as autos and appliances. Weaker consumer confidence is also affecting the housing market, with less buying and selling and lower prices in many Canadian markets.

Consumer confidence in both Canada and the U.S. has been plummeting in the wake of the stock market meltdown, ongoing credit crisis and slumping economies.

For example, the Toronto stock market has lost more than 40 per cent of its value since a mid-June record high, wiping out hundreds of billions of dollars of stock value and squeezing the investments of Canadians held in pension plans, stocks and mutual funds.

The Canadian survey showed all regions of the country are feeling gloomier about the economy.

The one bright spot in the Conference Board survey is that more respondents felt it was a good time to make major purchases.

The survey of 2,000 Canadians was conducted Dec. 4-12.

The report comes as most economists predict Canada's unemployment rate will rise to about eight per cent next year, from the current 6.3 per cent, resulting in something Canadians also haven't seen in a generation, outright job losses of 200,000 from the recession's peak to trough.

While the jobless rise in 2009 will hurt, it's still a far cry from the last two recessions, however. Unemployment hit 13 per cent in the 1980-81 decline, when industrial North America – mainly the steel and auto sectors – went through a painful restructuring.

In the early 1990s the recession hurt real estate and retail sectors and pushed the jobless rate to 10 per cent.

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